Research On The Relationship Between Corporate Philanthropy And Stock Price Volatility

Since the1980s, with the extension of enterprises’ scale and impact, the development of monitoring means and the promotion of public sensitivity, enterprises are being required to be operated in a social and environmental responsible way at a higher level, and more corporate social responsibility (CSR) campaigns are being launched. At the same time, more corporates start to change their traditional practices and try to bring CSR to their strategic plans in order to gain both the beneficial results of economy and society. Among these different CSR means, corporate philanthropy is being taken out widely. Then, what influence does corporate philanthropy has on listed companies in China? Does corporate philanthropy cause some changes of prices of stocks? Which kinds of roles do the features of behavior of corporate philanthropy and corporates themselves play in the event?Based on the analysis of126samples data by event study and multiple regression method, some conclusions are made in this thesis:Corporate philanthropy behaviors significantly affected prices of stocks. Generally, capital market made undesirable and negative responses to corporate philanthropy behaviors. And there was obvious hysteresis quality as the cumulative abnormal returns (CAR) changed into significant negative values since1lth day.There was a stable positive relationship between the sequencing of per-share donation and abnormal returns (AR) of prices of stocks, and there wasn’t such relationship between the sums of donation or the sequencing of sums or the number of per-share donation and AR or CAR. It showed that the public paid more close attention to number of shares and the sequencing of per-share donation than to the sums of donation.It was found out that state-controlled corporates, the proportion of traded A-shares’and the interference accidents showed negative relationships with CAR, which to a certain extent diluted the negative response made by capital market and suggested a strategic transfer of corporate philanthropy in the future.The factors of industries and sizes didn’t show significant relationships with CAR, which means that these two factors didn’t affect the abnormal volatility of the stocks prices. Some effective policies were proposed. The government should focus on development of the level of corporate governance of state-controlled companies as they encourage firms to participate into philanthropy. The firms should pay more attention to bring CSR to their strategic plans in order to gain both the beneficial results of economy and society.